Determinants of profitability in Spanish financial institutions. Comparing aided and non-aided entities

The last financial crisis has led to the greatest contribution of public funds ever made to Spanish banks. This paper studies why the need for support has been asymmetric, with not all of the institutions requiring aid. Based on profitability of assets (ROA), we determine using panel data econometric and logit response models the components of profit and loss accounts that generated profitability as well as the factors leading to some entities to ask for aid. The analyses show that before the beginning of the crisis there were significant differences between entities that needed aid and those that did not. The most profitable banks grounded their success in the traditional revenue components of financial institutions (such as margin on interest rates and commissions), as well as in revenues obtained from participated companies and extraordinary results. The model offers a tool to detect entities in difficulties in advance, reducing the financial and social costs of public interventions. The factors more impacting on profitability of Spanish institutions are also identifie

Regional Productivity Variation and the Impact of Public Capital Stock : An Analysis with Spatial Interaction, with Reference to Spain

In this paper we examine whether variations in the level of public capital across Spain‟s Provinces affected productivity levels over the period 1996-2005. The analysis is motivated by contemporary urban economics theory, involving a production function for the competitive sector of the economy („industry‟) which includes the level of composite services derived from „service‟ firms under monopolistic competition. The outcome is potentially increasing returns to scale resulting from pecuniary externalities deriving from internal increasing returns in the monopolistic competition sector. We extend the production function by also making (log) labour efficiency a function of (log) total public capital stock and (log) human capital stock, leading to a simple and empirically tractable reduced form linking productivity level to density of employment, human capital and public capital stock. The model is further extended to include technological externalities or spillovers across provinces. Using panel data methodology, we find significant elasticities for total capital stock and for human capital stock, and a significant impact for employment density. The finding that the effect of public capital is significantly different from zero, indicating that it has a direct effect even after controlling for employment density, is contrary to some of the earlier research findings which leave the question of the impact of public capital unresolved

Do bad borrowers hurt good borrowers? A model of biased banking competition

This paper explores a two-bank model in which, first, one bank correctly estimates the probability of low-quality loan repayment while the other overestimates it, and second, both banks have identical convex costs when granting loans. In this context of optimistically biased banking competition, we show how the unbiased bank follows the biased competitor as long as the bias of the latter is not too large. This would favour bad borrowers, who get better credit conditions at the expense of good borrowers. As a consequence, the presence of a biased bank increases welfare as long as the expected default rate is sufficiently high. Contrariwise, in subprime markets, biased banking competition would be socially harmful.info:eu-repo/semantics/publishedVersio

Costs and benefits of automation for astronomical facilities

The Observatorio Astrof\'isico de Javalambre (OAJ{\dag}1) in Spain is a young astronomical facility, conceived and developed from the beginning as a fully automated observatory with the main goal of optimizing the processes in the scientific and general operation of the Observatory. The OAJ has been particularly conceived for carrying out large sky surveys with two unprecedented telescopes of unusually large fields of view (FoV): the JST/T250, a 2.55m telescope of 3deg field of view, and the JAST/T80, an 83cm telescope of 2deg field of view. The most immediate objective of the two telescopes for the next years is carrying out two unique photometric surveys of several thousands square degrees, J-PAS{\dag}2 and J-PLUS{\dag}3, each of them with a wide range of scientific applications, like e.g. large structure cosmology and Dark Energy, galaxy evolution, supernovae, Milky Way structure, exoplanets, among many others. To do that, JST and JAST are equipped with panoramic cameras under development within the J-PAS collaboration, JPCam and T80Cam respectively, which make use of large format (~ 10k x 10k) CCDs covering the entire focal plane. This paper describes in detail, from operations point of view, a comparison between the detailed cost of the global automation of the Observatory and the standard automation cost for astronomical facilities, in reference to the total investment and highlighting all benefits obtained from this approach and difficulties encountered. The paper also describes the engineering development of the overall facilities and infrastructures for the fully automated observatory and a global overview of current status, pinpointing lessons learned in order to boost observatory operations performance, achieving scientific targets, maintaining quality requirements, but also minimizing operation cost and human resources.Comment: Global Observatory Control System GOC

Addressing information asymmetries in online peer-to-peer lending

Digital technologies are transforming how small businesses access finance and from whom. This chapter explores online peer-to-peer (P2P) lending, a form of crowdfunding that connects borrowers and lenders. Information asymmetry is a key issue in online peer-to-peer lending marketplaces that can result in moral hazard or adverse selection, and ultimately impact the viability and success of individual platforms. Both online P2P lending platforms and lenders seek to minimise the impact of information asymmetries through a variety of mechanisms. This chapter discusses the structure of online P2P lending platforms and reviews how the disclosure of hard and soft information, and herding can reduce information asymmetries. The chapter concludes with a discussion of further avenues for research

Banking competition and welfare

We develop a simple general equilibrium model in which investment in a risky technology is subject to moral hazard and banks can extract market power rents. We show that more bank competition results in lower economy-wide risk, higher social welfare, lower bank capital ratios, more efficient production plans and Pareto-ranked real allocations. Perfect competition supports a second best allocation and optimal levels of bank risk and capitalization. These results are at variance with those obtained by a large literature that has studied a similar environment in partial equilibrium, they are empirically relevant, and carry significant implications for policy guidance